NEW YORK: The S&P 500 and the Dow were subdued in choppy trading on Thursday as Federal Reserve Chair Jerome Powell stuck to his hawkish stance on the second day of his testimony before the Senate committee, while gains in growth stocks kept losses in check.
Powell defended the likely need for further interest rate increases despite the possible impact on jobs on the second day of hearings before the committee.
Meanwhile, Fed Governor Michelle Bowman said “additional policy rate increases” will be needed to control inflation she feels has essentially flatlined at a high level since late last year.
Financial markets, however, are still pricing in a 25-basis-point rate increase in July and no further hikes after that, according to CME FedWatch tool.
“There’s a level of uncertainty and that’s why you’re seeing kind of indirection in the market,” said Thomas Hayes, chairman at Great Hill Capital LLC.
“People are saying ‘listen, some of these names have run a lot and let’s now digest this and see where the Fed is going and what happens with inflation numbers’.” The benchmark S&P 500 moved between marginal losses and gains in the session after three straight days of losses as worries about further rate hikes were overshadowed by rebounding shares of magacap growth stocks.
Amazon.com gained 3.0% to hit a nine-month high and kept tech-heavy Nasdaq afloat. Apple and Microsoft also firmed about 1% each.
Tesla pared early losses following Morgan Stanley’s downgrade to “equal weight” to rise 1.0%.
Six of the 11 major S&P sectors declined with real estate and energy leading losses, while consumer discretionary led gains.
Meanwhile, there were early signs of a softening labor market as a report showed that number of people filing for state unemployment benefits for the first time held steady at a 20-month high last week.
At 12:27 p.m. ET, the Dow Jones Industrial Average was down 49.99 points, or 0.15%, at 33,901.53, the S&P 500 was up 1.58 points, or 0.04%, at 4,367.27. The Nasdaq Composite was up 58.45 points, or 0.43%, at 13,560.65.
Spirit AeroSystems tanked 8.6% and planemaker Boeing slipped 2.2% as the parts supplier said it will suspend production at its plant in Wichita, Kansas, after workers announced a strike from June 24.
US-listed shares of Accenture fell 3.1% after the IT consulting firm forecast fourth-quarter revenue below market expectations.
Darden Restaurants slid 2.0% after the Olive Garden parent forecast its annual outlook below estimates.
Declining issues outnumbered advancers for a 2.56-to-1 ratio on the NYSE and for a 1.64-to-1 ratio on the Nasdaq.
The S&P index recorded 12 new 52-week highs and five new lows, while the Nasdaq recorded 39 new highs and 89 new lows.
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